Intelligent Marketing

The challenge of marketing comes from uncertainty. A businessman (possibly John Wanamaker) once said, "Half the money I spend on advertising is wasted; the trouble is I don't know which half."

Matthew Leitch credits David Ogilvy with pioneering an experimental approach to advertising.

"Something that distinguished his approach from most other advertising agencies was his focus on using solid research to help make marketing decisions. He loved direct mail (or 'junk' mail as most people call it) because with direct mail it is possible to measure the response to advertising accurately. He could send slightly different advertisements to different groups of people and see what difference it made. He applied the same idea using reply coupons on page advertisements in newspapers and magazines, and used other forms of testing too. ... He also codified his research discoveries into over 100 rules of thumb to be applied to future advertisements. "

Ogilvy's approach has now become a routine element of the marketing process. I found a page on the IBM website documenting a Marketing Experimentation process to be automated using Websphere Commerce, although maybe it lacks Ogilvy's flair.

Experimentation allows marketing activity to be differentiated for different categories of customer demand, and refined in order to satisfy marketing goals more cost-effectively. One of the critical success factors here is the speed of the feedback loop - the faster the better.

There are various opportunities here for software technology to facilitate this feedback, by deploying advanced marketing communication tools that allow near-real-time measurement and analysis of campaigns. For example, a company called Intelligent Marketing Solutions claims to give you

"the ability to track, trace and manage every click your customer makes be it on a PC, Mobile or Tablet, you will know exactly how a campaign is performing around the clock and have the ability to make changes along the way to react to trends in response."

Other marketing tools can be used to provide independent monitoring of the effects of a marketing campaign, such as Buzz. See my post From Buzz to Actionable Intelligence (May 2010). If today's Buzz can give us a reasonable estimate of future revenues, then the marketing team can use Buzz as a predictive surrogate metric for the actual commercial success of a campaign.

Faster feedback can support single-loop learning - getting better at achieving a given set of marketing goals. Michael Mainelli and Ian Harris use a simplified version of VSM to describe a marketing process with feedforward and double-loop learning. Their system includes monitoring, information sharing, sense-making, planning, and continuous improvement - in other words a form of organizational intelligence.

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Dion Hinchcliffe, Advocacy: The New Currency of Marketing (15 January 2013)

Ira Horowitz, A Note on Advertising and Uncertainty. Journal of Industrial Economics, Vol. 18, No. 2 (April 1970), pp. 151-160 http://www.jstor.org/stable/2097504

Michael Mainelli and Ian Harris, Is Your Organisation Viable? – Customer Relationship Management Systems, Conspectus, Prime Marketing Publications Ltd (October 1999) pages 26-27. via Matthew Leitch

David Ogilvy, Ogilvy on Advertising (Pan Books, 1983)

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Places are still available on my forthcoming workshops Business Awareness (Jan 28), Business Architecture (Jan 29-31), Organizational Intelligence (Feb 1).

Corporate Elephantiasis

"The BBC is an archetypal case of corporate elephantiasis, an organisation too big to take clear and swift decisions. Its senior managers are lost in a corporate maze of directorates, divisions, Chinese walls and spectrums of delegation."

Simon Jenkins, Guardian 23 October 2012

The popular belief in merger and acquisition to deliver economics of scale overlooks the common reality "that high executives from one of the previously separate corporations would be at loggerheads with executives from the other, that from top to bottom the cultures of melded corporations wouldn’t mesh, that cost savings wouldn’t materialize, that earnings would not be smoothed out, that purchasing corporations wouldn’t know how to make good use of acquired corporations, that different industries require very different mentalities, that size was achieved by destroying highly innovative, often new companies, that companies make acquisitions not because this creates better economic entities but because it creates more power, more prestige and vast compensation for high executives".

Dean Velvel, The Bigger The Company, The More Disastrous The Mistake (September 2008)

"Many companies try to grow via big acquisitions. These deals are seductive, because you get lots of favorable ink and a love buzz from Wall Street. You also buy time to implement your strategy, if you actually have one, because year-to-year financials aren't comparable and outsiders can't analyze your results. WorldCom is a classic case. Chief executive Bernie Ebbers--make that former chief executive Ebbers--wanted his grandly named enterprise to be the nation's biggest telecom firm. He got up to No. 2 by making about five dozen acquisitions. But when the takeover music stopped two years ago after regulators nixed his proposed purchase of Sprint, it became clear the company was a mess. Bye-bye, Bernie. And with WorldCom stock down 95 percent from its high, bye-bye to $100 billion of shareholder wealth."

Allan Sloan, Memo To Ceos: Bigger Isn't Better (Newsweek via Daily Beast, May 2002)

Size and Organizational Intelligence

What’s it like working in an intelligent organization? If you’ve ever worked in a successful start-up, you’ll recognize that there is a real desire to understand what the customers want, and strong commitment to collaborative problem-solving. Meetings are focused on solving real issues, and there is little tolerance for the kind of unproductive games that people play in larger and more established companies. In principle, it should be possible to have this kind of positive experience in any organization: in practice, these aspects of intelligence get rarer as an organization gets larger and older.

It is a popular idea that large organizations should behave like small organizations: one way to achieve this is to look at the way successful small organizations practise organizational intelligence. Let us start by asking whether it is NECESSARY to sacrifice the good things about small organizations to become a big one? And if not, why does it often seem to happen?

Small startup companies often need to mobilize high levels of organizational intelligence. One reason may be a self-reinforcing narrowness of scope that forces a tight focus on essentials; small companies have very limited resources they can't afford to squander. Therefore the founders and early employees scan the environment keenly and solve problems collectively.

As the company grows in size, it may lose some of this keen intelligence. Customer situations recur, and many of the day-to-day problems have been solved, so the challenge becomes simply efficiently repeating known solutions to known problems. Meanwhile, the immediate and intensive communication and coordination enjoyed by small teams gets attenuated as the organization grows. Workers still spend large amounts of time communicating with their colleagues, but the critical flows of information are more indirect and may suffer interruption, distortion and interference.

Because of these factors, large companies often display a number of pathological characteristics. For example: forced diversification to keep growing; geographic expansion and timezone issues; competitors start to see you as a threat; regulators get interested in you; new people join with their own agendas.

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Extract from new book on Organizational Intelligence by Richard Veryard. Available at http://leanpub.com/orgintelligence/